CHEMICALS
JANUARY 2016
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1
CHEMICALS
Executive Summary……………….............. 3
Advantage India……………………............. 4
Market Overview and Trends……………….6
Porters Five Forces Analysis……….……..21
Growth Drivers…………………………..…. 23
Opportunities………………………….…… 32
Success Stories…………………………… 39
Useful Information…………………………..47
JANUARY 2016
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2
CHEMICALS EXECUTIVE SUMMARY •
Leading position globally
High GDP share
Global dye supplier
Global player in specialty chemicals
Increasing exports of inorganic and organic Chemicals
In terms of value and production volume, Indian chemical industry is the 3rd largest producer in Asia and 6th by output in the world. Indian chemical industry could grow at 11 per cent p.a. to reach size of USD224 billion by 2017 • In 2015, India chemicals industry had a market size of USD144 billion
•
The chemical industry in India is a key constituent of Indian economy, accounting for about 2.11 per cent of the GDP
•
India accounts for approximately 16 per cent of the world production of dyestuff and dye intermediates, particularly for reactive acid and direct dyes
India is currently the world’s third largest consumer of polymers and third largest producer of agrochemicals • India specialty chemical market is expected to reach USD70 billion by 2020 •
•
Value of India’s exports of inorganic chemicals have increased from USD1.4 billion in FY14 to USD0.70 billion in FY15*, while the organic chemical market has reached USD5.9 billion in FY15* from USD12.04 billion in FY14
Source: Make in India, Confederation of Indian Industry, TechSci Research Notes: PCPIR - Petroleum, Chemicals and Petrochemical Investment Regions; E – Estimated; * - Upto September 2014
JANUARY 2016
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3
CHEMICALS
ADVANTAGE INDIA JANUARY 2016
CHEMICALS ADVANTAGE INDIA Growing Robust demand demand
2015 Market size: USD144 billion
•
A large population, dependence on agriculture, and strong export demand are the key growth drivers for the chemicals industry
•
Per-capita consumption of chemicals in India is lower relative to Western peers and there exists a large latent demand
Attractive opportunities
2017E
•
Polymers and agrochemicals industries in India present immense growth opportunities
•
The size of India’s construction chemical market stood at USD580.62 million in 2014, thereby representing ample growth opportunity
Market size: USD224 billion
Advantage India Increasing investments •
•
JANUARY 2016
Lured by the size and returns of the Indian market, foreign firms have strengthened their presence in India From April 2000 to September 2015, total FDI inflows into the Indian chemicals industry (excluding fertilisers) were USD10.82
Policy support •
•
• •
In 2015, CII launched second phase of “Chemistry Everywhere” campaign to boost the growth of chemical industry in India 100 per cent FDI is permissible in the Indian chemicals sector; manufacturing of most chemical products is de-licensed Setting up of PCPIRs The Government of India has launched the Draft National Chemical Policy, which aims to increase India’s chemical sector in the GDP
Source: FICCI, Make in India, Department of Industrial Policy and Promotion (DIPP), TechSci Research Notes: PCPIR - Petroleum, Chemicals and Petrochemical Investment Regions, CII – Confederation of Indian Industry; E – Estimated
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5
CHEMICALS
MARKET OVERVIEW AND TRENDS JANUARY 2016
CHEMICALS EVOLUTION OF THE INDIAN CHEMICAL INDUSTRY Expansion (1995 onwards)
Liberalisation (1992-95) Consolidation (1980-92) Establishment (1972-80)
• •
Consolidation Basic needs started from (1950-72) largely • Public sector fragmented firms companies were with small set up to capacities and develop the high cost • Chemical petrochemical structures products to industry • Paints, dyes, protect crops • Plastic and pharmaceuticals • Agrochemicals, fibres, and detergents dyes, petrochemical pharmaceuticals products
Major investment plans by both Indian firms and MNCs • Lower tariff barriers • Diminishing role of public sector companies • Petrochemicals, engineering plastic, specialty fibres
•
• •
•
•
In 2015, DCPC has announced to design a 16 point plan framework that would encourage the domestic production of chemicals Alliances and partnerships to achieve scale Licensing requirements removed except in the case of hazardous chemicals Increasing investments by foreign players in India through mergers & acquisition and joint ventures Allowed 100 per cent FDI in the chemicals Industry
Source: FICCI, Make in India, CII, TechSci Research Note: MNC – Multinational Corporation, DCPC - Department of Chemicals and Petrochemicals
JANUARY 2016
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CHEMICALS MAJOR SEGMENTS OF THE INDIAN CHEMICAL INDUSTRY •
Petrochemicals, man-made fibres, industrial gases, fertilisers, chlor-alkali, and other organic and inorganic chemicals
•
Dyes and pigments, leather chemicals, construction chemicals, personal care ingredients and other specialty chemicals
Pharmaceuticals
•
Active Pharmaceutical Ingredients (APIs) and formulations
Agrochemicals
•
Insecticides, herbicides, fungicides and other crop protection chemicals
Biotechnology
•
Bio-pharma, bio-agri, bio-services and bio-industrial products
Base chemicals
Specialty chemicals
Source: TATA Strategic Management Group, TechSci Research
JANUARY 2016
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8
CHEMICALS PRODUCT-WISE CLASSIFICATION OF THE INDIAN CHEMICAL INDUSTRY Alkali chemicals
Organic chemicals
Inorganic chemicals
•
Soda ash
•
Aluminum flouride
•
Acetic acid
•
Caustic soda
•
Calcium carbide
•
Acetone
• •
Liquid Chlorine
•
Carbon black
•
Dichlorodiphenyltrichloroethane (DDT)
•
Azo dyes
•
Disperse dyes
Phenol
•
Malathion
•
Fast colour bases
•
Parathion
•
Ingrain dyes
•
Ethicon
•
Napthols
•
Endosulphan
•
Vat dyes
•
Phosalone
•
Reactive dyes
Potassium chlorate
•
Methanol
•
Titanium dioxide
•
Ortho Nitro Chlorobenzene (ONCB)
Red phosphorus
Dyes & dyestuffs
•
• •
Pesticides & insecticides
•
Isobutyl
•
Phorate
•
Para Nitrochlorobenzene (PNCB)
•
Pigment Emulsion
•
Acephate
•
Sulphur dyes
•
Fenvalerate
•
Other dyes
•
Ethyl
Source: TechSci Research
JANUARY 2016
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9
CHEMICALS CHARACTERISTICS OF THE INDIAN CHEMICAL INDUSTRY Indian chemical industry
High domestic demand potential
•
Focus on new segments such as specialty and knowledge chemicals
Gujarat and Maharashtra have emerged as most favoured zones
Fragmented industry
Increase in focus on R&D
As on 2015, the National Chemical Policy of India which is expected to help in improving the chemical industry is in final stages and as a part of this, the Government is planning to launch Indian Bureau of Corrosion Control and setting up National Chemical Centre that could prevent losses from corrosion and act as a repository information center for the chemical industry
•
Strong economic growth and rise in per-capita income has meant a steady increase in demand for chemicals
•
Expected to clock a growth of 10-13 per cent over the coming years
•
The industry has left behind a low-growth and regulated environment to emerge more mature
•
There is strong government support towards R&D; this would benefit the sector
•
In 2015, Department of Chemicals and Petrochemicals added three new chemical and petrochemical products under
•
its supervision.
JANUARY 2016
Source: FICCI, TechSci Research Note: R&D – Research and Development
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10
CHEMICALS DOMESTIC AND EXTERNAL DEMAND DRIVING GROWTH IN THE SECTOR … (1/2) Total production in the Indian chemical industry was 9107 MT in FY11 and reached to 9627 MT in FY14 clocking a CAGR of 1.9 per cent from FY11-14; In FY15 (upto September 2014), the production reached at 4794 thousand MT
Total production of major chemicals (000’ MT)
9107
9395
9440
9627
Favourable demographics and strong economic growth are driving demand for chemicals
4794
External demand and specialty chemicals have also contributed strongly to the growth of the industry
India’s growing per capita consumption and demand for agriculture-related chemicals offers huge scope of growth for the sector in the future
JANUARY 2016
FY11
FY12
FY13
FY14
FY15*
Source: Department of Chemicals and Petrochemicals, TechSci Research Note: MT - Metric Tonne FY15*: From April to September 2014
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11
CHEMICALS DOMESTIC AND EXTERNAL DEMAND DRIVING GROWTH IN THE SECTOR … (2/2) With 68.40 per cent of the total production share, alkali chemicals form the largest segment in the Indian chemical industry in FY15 (upto September 2014) During FY15 (April to September 2014), alkali chemicals’ production stood at 3,279 MT
Production of major chemicals (000’ MT)
Production share of major chemicals during FY15*
35000 1.90%
30000
3.09% Alkali Chemicals
25000 20000
Inorganic Chemicals
17.38%
15000 Organic Chemicals
10000
9.24%
5000
0 Alkali Chemicals FY11
Inorganic Chemicals FY12
Organic Chemicals FY13
Pesticides FY14
Dyes& Dyestuffs
Pesticides 68.40% Dyes& Dyestuffs
FY15 (April 14 to Sep 14) Source: Department of Chemicals and Petrochemicals, TechSci Research Notes: MT - Metric Tonne, Kg - Kilo gram, CAGR - Compound Annual Growth Rate Note: *-April to September 2014
JANUARY 2016
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12
CHEMICALS EXPORTS HAVE BEEN RISING OVER THE YEARS … Chemical exports of India (USD billion) Exports of the Indian chemical industry stood at USD4.9 billion for FY16*
Exports in the chemical industry grew from USD12.4 billion in FY13 to USD12.7 billion in FY15, registering a growth of 0.9 per cent
CAGR: 0.9% 12.4
12.6
12.7
4.9
FY13
FY14
FY15
FY16*
Source: Ministry of Commerce, TechSci Research Notes: FY16* - Upto August 2015
JANUARY 2016
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13
CHEMICALS … BUT, INDIA IS A NET IMPORTER OF CHEMICALS India’s chemical imports (USD billion)
Total imports of chemicals grew from USD10.1 billion in FY13 to USD19 billion in FY15, a CAGR of 37.5 per cent Total imports of chemicals reached USD7.7 billion in the FY16*
CAGR: 37.5% 18.0
19.0
10.1 7.7
FY13
FY14
FY15
FY16*
Source: Ministry of Commerce, DGCI&S, TechSci Research Notes: FY16* - Data is up to August 2015, CAGR - Compound Annual Growth Rate
JANUARY 2016
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CHEMICALS ORGANIC CHEMICALS DOMINATE BOTH EXPORTS AND IMPORTS … (1/2) Shares in exports of chemicals in FY16* During FY16*, organic chemicals constituted 44.05 per cent of India’s total chemical exports, followed by miscellaneous chemical at 18.45% 18.45%
Within agrochemicals herbicide is the largest segment globally, however, consumption of insecticides in India is dominating. Growth of agro chemicals is largely driven by export demand
Organic 5.21%
44.05%
Dyes and Dye stuff Agro Chemicals Inorganic
14.21%
Miscellaneous Chemcials 18.07%
Source: Ministry of Commerce, TechSci Research Note: CAGR - Compound Annual Growth Rate * - Data for April-August 2015
JANUARY 2016
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15
CHEMICALS ORGANIC CHEMICALS DOMINATE BOTH EXPORTS AND IMPORTS … (2/2) Shares in imports of chemicals in FY16*
Organic chemicals also dominate imports, with a share of 59.03 per cent, followed by inorganic chemicals at 23.57 per cent in FY16*
5.51% 6.63%
Organic Chemicals
5.26% Inorganic Chemicals Dyes and Dyestuff 23.57%
59.03%
Agro Chemicals Miscellaneous Chemicals
Source: Ministry of Commerce, TechSci Research Note: CAGR - Compound Annual Growth Rate * - Data for April-August 2015
JANUARY 2016
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16
CHEMICALS CHEMICAL INDUSTRY HOLDS A SIGNIFICANT POSITION IN THE ECONOMY
2.11 per cent of national GDP 3rd largest chemical industry in Asia, preceded by China and Japan
Government allows 100 per cent FDI in the chemical sector
India’s chemical industry (2013-15) 9.2 per cent of total exports and 7.6 per cent of total imports
JANUARY 2016
In 2025, Chemical Industry is expected to grow and reach USD602.85 billion mark
One of the most diversified sectors, covering more than 70,000 commercial Products
Source: FICCI, TechSci Research Notes: Figures mentioned above is taken from Dept. of Chemicals and Petrochemicals;
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CHEMICALS HIGH GROWTH WOULD LEAD TO RISING GLOBAL POSITIONING 2015
2017E
•
Global chemical industry: USD3.26 trillion
•
Global chemical industry: USD4.5 trillion
•
India chemical industry: USD144 billion
•
India chemical industry: USD224 billion
Contribution to global chemical industry would increase 2017E
Strong growth outlook for the Indian chemicals industry (USD billion) 4.98%
2015
CAGR: 17.4%
3.46%
224
144 118
96.54%
95.02% 2013
2015
2017E
Source: FICCI, TechSci Research Notes: CAGR - Compound Annual Growth Rate, E - Estimate Global
JANUARY 2016
India
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18
CHEMICALS WIDESPREAD CHEMICAL INDUSTRY INFRASTRUCTURE ACROSS INDIA … (2/2)
Baddi Derabassi Panipat
Bathinda
NCR Vadodara Ahmedabad Jamnagar,
Nagda
Haldia Bharuch, Hazira, Vapi Thane, Pune, Chiplun Hyderabad Visakhapatnam, Kakinada Mangalore Bengaluru
Chennai
Cuddalore, Puducherry
Cochin
JANUARY 2016
Source: D&B, TechSci Research
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19
CHEMICALS KEY DOMESTIC AND INTERNATIONAL PLAYERS IN INDIAN CHEMICAL INDUSTRY
Domestic company
Sales in FY16* (USD billion)
Products Soda ash, salt, marine chemicals,
Tata Chemicals Limited (TCL)
1.5
United Phosphorus Limited (UPL)
0.96
Nirma Ltd
1.2^
Gujarat Heavy Chemicals Ltd (GHCL)
0.2
Soda ash
Gujarat Alkalies and Chemicals Ltd (GACL)
0.15
Caustic soda
caustic soda, cement, etc. Agrochemicals Alkyl benzene, alfa olefin sulphonate, sulfuric acid, soda ash
Source: Company Annual Reports, TechSci Research Notes: * For first six months (April-September ), ^ for FY14
JANUARY 2016
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20
CHEMICALS
PORTERS FIVE FORCES ANALYSIS JANUARY 2016
CHEMICALS PORTERS FIVE FORCES ANALYSIS Competitive Rivalry •
• •
Chemical industry is highly fragmented with intense rivalry amongst companies Since, 100 per cent FDI is allow hence domestic companies face stiff competition from foreign competitors as well International companies may also dump chemicals at low price
Threat of New Entrants •
•
Huge capital requirements and patent protection are significant barriers Other barriers include - R&D and personnel requirements
Bargaining Power of Suppliers •
•
Small chemical companies rely on supplies from larger plants, or petrochemical units Inputs for a chemical plant cannot be easily substituted
JANUARY 2016
Threat of New Entrants (High)
Substitute Products • •
Buyers tend to have specific chemical requirements There are no direct substitutes for a specific chemical requirement
Bargaining Power of Customers (Medium)
Competitive Rivalry (Medium)
Substitute Products (Low)
Bargaining Power of Customers • •
•
Customers have multiple sources of supply Chemical companies are bound by long-term contracts Niche specialty chemicals have some pricing power
Bargaining Power of Suppliers (High)
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22
CHEMICALS
GROWTH DRIVERS JANUARY 2016
CHEMICALS GROWTH DRIVERS OF THE INDIAN CHEMICAL INDUSTRY Huge growth potential for the domestic market
World class engineering and strong R&D capabilities
Government Policy support and increase in investment initiatives
Rise in GDP and purchasing power
Low-cost manufacturing
Source: TechSci Research
JANUARY 2016
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24
CHEMICALS ECONOMIC EXPANSION WOULD CONTINUE TO DRIVE GROWTH IN THE CHEMICAL INDUSTRY Being largely an intermediate product, strong economic growth is an important factor in sustaining demand for chemical products Per capita consumption of most of the finished products under chemicals sector is far below the world average; this points to the vast potential for growth in the industry As in a number of other industries in India, strong growth in discretionary income and changing lifestyles are counted as a few of the other major growth drivers of the chemicals sector
Per capita GDP growth
7.68%
6.67%
6.10%
5.60%
3.70%
5.20%
8.70%
7.00%
2.50%
8.30%
7.5% 2016F
7.70%
7.3% 2015F
5.6%
5.0% 2013
2014
4.7% 2012
2011
2010
2009
2008
2007
2006
3.9%
6.6%
10.3%
8.5%
9.8%
9.3%
Real GDP growth
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F Source: IMF, TechSci Research
JANUARY 2016
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25
CHEMICALS POLICY SUPPORT FOR FOREIGN INVESTMENT FDI in chemicals (other than fertilisers) stood at USD10,823 million during April 2000- September 2015 Procedures relating to FDI have been simplified; most of the items in the chemicals sector fall under the automatic approval route for FDI/NRI/OCB investment up to 100 per cent The USD7.2 billion deal between Reliance Industries Limited and British Petroleum is the most significant deal in Indian chemical sector
Share of chemical industry in total FDI inflow (excluding fertiliser)
Annual FDI inflow to the chemical industry (excluding fertilizer) (USD Million)
10336
10588
10.60%
11.30%
4041 2354 292 FY11
FY12
FY13
4.16%
4%
FY14
FY15
FY16*
1.30%
878 FY14
4.44%
FY15
FY16*
FY11
FY12
FY13
Source: Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, TechSci Research Note: * - Up to June 2015
JANUARY 2016
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26
CHEMICALS GOVERNMENT SUPPORT TO THE SECTOR IS INCREASING … (1/2) All figures are in USD million Name of the scheme Project based
support to PSUs Support to autonomous bodies Other ongoing schemes New schemes initiated
XI Plan outlay Annual Plan (2007-2012) FY11
Annual Plan FY12
Annual Plan Annual Plan FY13 FY14
Annual Plan FY15
Annual Plan FY16*
29.1
4.3
0.0
5.4
1.3
5.81
5.24
19.2
0.1
0.2
8.3
23.80
16.79
15.34
44.2
165.8
183.4
292.8
167.32
5.7
10.2
25.0
17.9
10.1
-
-
-
-
117.5
188.1
193.7
306.5
224.7
28.3
30.78
in XI plan
Total
Source: Department of Chemicals and Petrochemicals, TechSci Research Notes: * - Budget Estimate
JANUARY 2016
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27
CHEMICALS GOVERNMENT SUPPORT TO THE SECTOR IS INCREASING … (2/2)
Name of the scheme
Non-plan outlay (FY10)
Assam Gas Cracker Project
All figures are in USD million Non-plan Non-plan Non-plan outlay outlay outlay (FY12) (FY11) (FY13)
Non-plan outlay Non-plan outlay (FY14) (FY15*)
130.48
127
254.17
16
0
Secretariat
2.21
2.52
2.79
2.3
2.4
0.1
Central Institute of Plastics Engg. & Technology
0.63
0.10
0.10
0
0
13.68
0
0
0
17.5
23.3
0
0
0
0
0.6
0.6
0.14
Others
0.50
0.54
0.63
0
0
6.3
Total
3.34
133.64
130.52
274.57
42.3
20.22
(CIPET) Bhopal Gas Leak Disaster Institute of Pesticide Formulation Technology (IPFT)
Source: Department of Chemicals and Petrochemicals, TechSci Research Note: * - As on December 31, 2014
JANUARY 2016
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28
CHEMICALS GROWTH, COMPETITIVENESS AND PROCESS INITIATIVES The government has announced a number of measures to improve competitiveness in the sector
Industry-level initiatives
Share of manufacturing approved by the Cabinet as per the erstwhile Planning Commission would contribute 25% of the GDP by 2025
•
The Indian Chemical Council (ICC ) is the nodal agency/signatory representing India under the ‘Responsible Care Initiative’
Approval is granted for FDI up to 100 per cent in the chemicals sector, excise duty reduced from 14 per cent to 10 per cent, strong laws on anti-dumping to further promote the industry
•
ICC has prepared codes and guidance for implementation of process safety, employee health and safety, pollution prevention, emergency response, and product safety
•
Member companies of ICC are encouraged to interact with local communities and groups such as students, teachers, fire/police personnel
Cumulative FDI inflows into chemical industry reached USD10,588 million during April 2000-June 2015 Policies that have been initiated to set up integrated Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) is likely to be revised by the end of 20152016. The land requirement for a PCPIR would go down from 250 square kilometres to 50 square kilometres Kerala, Karnataka and Maharashtra are new applicants for PCPIR
New initiatives are likely to attract large investments, both domestic and foreign, with requisite improvements in infrastructure and competition
JANUARY 2016
Firm-level initiatives •
Indian chemical firms have strived to increase their market share through global presence
•
They have in place technical agreements with multinational firms to keep abreast of technological progress in the global chemical industry
Source: EXIM Bank of India, TechSci Research, Note: PCPIR - Petroleum, Chemicals and Petrochemicals Investment Regions
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29
CHEMICALS MILESTONES PROPOSED FOR 12TH FIVE-YEAR PLAN Infrastructure
•
Make PCPIRs a reality
•
Provide infrastructure support to the industry by constructing roads, ports and other similar facilities
Feedstock
•
Implementation of strategy for sourcing and allocation of feedstock
R&D and technology
•
Setting up of technology upgradation fund of USD100 million
•
Allocation of 10 per cent share of the USD1 billion National Innovation Fund to chemicals
Sustainability
•
Development of the first set of chemical usage standards for the industry addressing key issues related to water supply, environmental impact, raw materials supply, safety over lifecycle, and energy use
Regulations
•
Committee to frame regulatory structure and eliminate redundancies
•
Setting up of a national chemical inventory
•
Government has rationalised and removed various tax exemptions and incentives to improve the administration and to reduce tax disputes
Source: TechSci Research Note: PCPIR - Petroleum, Chemicals and Petrochemicals Investment Regions
JANUARY 2016
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30
CHEMICALS RECENT MAJOR M&A DEALS IN THE INDIAN CHEMICAL INDUSTRY …
Acquirer
Target/ JV partner
Valuation
Synergies/ drivers
Inbound Jun-15
Evonik Industries
Monarch Catalyst Pvt. Ltd.
-
Global leader in catalysts
April-14
Yanmar Ltd/ Mitsui Ltd
Coromandel International Ltd
-
Manufactures rice transplanters and harvesters
April-14
Axiall LLC
Shriram Vinyl Polytech Pvt Ltd
USD6 million
Launched new-generation polymer compounds
December-13
Multiplast Polymer
Soft Clad Laminates
-
Manufacturer of plastic products
Outbound September-14
Brenntag
Pioma Chemicals
NA
Specialty chemicals
April-14
Asian Paints Ltd
Kadisco Chemical Industry PLC
-
Sells paints, coatings & adhesives in Ethiopia
Source: Department of Chemicals and Petro Chemicals, TechSci Research
JANUARY 2016
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31
CHEMICALS
OPPORTUNITIES JANUARY 2016
CHEMICALS GROWTH VALUE PROPOSITION OF THE INDIAN CHEMICAL INDUSTRY
Critical size of the domestic market
Established process know-how and strong R&D capability
Customised application development
Indian chemicals sector
Availability of reliable and competitive feedstock supply
Source: KPMG International 2011, TechSci Research
JANUARY 2016
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33
CHEMICALS SPECIALTY CHEMICALS: LUCRATIVE OPPORTUNITIES IN THIS SEGMENT Specialty chemicals market has expanded at a CAGR of about 12 per cent over FY07–11; the figure is expected to rise by 9.43 per cent from FY14 to reach USD90 billion by FY23, India is also gaining traction as an outsourcing hub The Indian middle-class household is expected to grow from 31 million in 2008 to 148 million by 2030, leading to a huge demand for specialty chemicals in automotives, water treatment and construction Compared to developed markets, current usage of specialty chemicals in India is very low, with an increased focus on improving products and usage intensity of specialty chemicals, the industry is poised for strong growth in future
Specialty chemical growth outlook by FY23 (USD billion)
Major sub-segments and their growth outlook by FY17 (USD billion) 8.2 5.3
CAGR: 9.43%
90
3.6 1.3
40
Paints and coatings
0.6
1.4
0.8
1.5
Speciality Construction Textile Polymers** Chemicals* Chemicals FY11
0.6 1.1 Water Chemicals
FY17E
* FY14
JANUARY 2016
FY23E
Source: FICCI, Dept. of Chemicals and Petrochemicals, TechSci Research, Note: * - Value is for 2014 Notes**- Value is for 2015 E: Estimated Value
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34
CHEMICALS WITHIN SPECIALTY CHEMICALS, CONSTRUCTION CHEMICALS IS LIKELY TO SHINE The size of India’s construction chemical market stood at USD573.2 million in 2014 With the construction sector expected to pace ahead due to strong economic growth, the fundamentals for construction chemicals are sound By 2019, the construction chemicals sector is set to touch USD1146.4 million India’s construction chemical sector consists of a variety of products ranging from admixtures to sealants. Admixtures form the largest segment with a 42 per cent share, followed by adhesives & sealants (18 per cent)
Specialty chemicals segments in 2014
Construction chemical growth outlook (USD million)
12% 1146.4
Admixtures
14%
CAGR 13.9%
42%
Adhesives & Sealants Flooring
573.2
14%
311.2
FY09
JANUARY 2016
Waterproofing 18%
FY14
FY19E
Repair and Rehabilitation
Source: FICCI, TechSci Research Note:E-Estimate
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35
CHEMICALS KEY GROWTH DRIVERS OF SPECIALTY CHEMICALS Water treatment chemicals are widely used in purification of water and also in large power plants, refineries and fertiliser factories
Water
Construction industry in India has been registering a CAGR of about 17 per cent over the last few years and is likely to gather momentum in the near future. Adoption of advanced coating, ceiling and polymer-based reinforcing material in construction will drive the demand for related chemicals
Construction
Automotive
Automotive sector in India has been expanding at a CAGR of ~12 per cent over the last five years. Automotive sector growth will drive demand for automotive components and consequently for plastics, paints and coatings used in their production
Source: TechSci Research
JANUARY 2016
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36
CHEMICALS POLYMER CHEMICALS WILL BE YET ANOTHER KEY SEGMENT OF SPECIALTY CHEMICALS Polymer chemicals
Polymer chemical growth outlook (USD million)
India is currently the world’s third largest consumer of polymers, behind China and the US, India’s polymer consumption is 6.2 million tonnes which constitutes 3 percent of the global consumption
1310
CAGR: 23.02%
Per capita consumption of polymer in India is 5.2 kg whereas China’s per capita polymer consumption is 30 kg. Indian Polymer market has grown at a CAGR of 23.02 per cent over 2005-15 to USD1310 million The sector is expected to grow at a higher rate due to growth in plastic demand resulting from increased usage in packaging, construction and automotive sectors Due to increasing environmental concerns and cost, replacement of wood, metal and glass by plastic will also augment demand
300 165
2005
2010
2015
Source: TATA Strategic Analysis, TechSci Research Notes: E - Estimates, CAGR - Compound Annual Growth Rate
Polymer production in India is around 9 million tonnes and imports stand at 2.8 million tonnes
JANUARY 2016
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37
CHEMICALS AGROCHEMICALS: THE FUTURE LOOKS BRIGHT India is the fourth largest producer of agrochemicals globally, market size to reach USD7.5 billion by FY19E Agrochemical industry in India is set to grow at a significant pace; increasing population, decreasing per capita availability of arable land and focus on increasing agricultural yield will fuel the demand for agrochemicals India's per hectare agrochemical consumption is set to rise in the coming years, given the above-mentioned factors In 2015, India has become one of the largest exporters of agrochemicals globally Insecticides India Ltd launched a mobile app for its customers, to provide them important updates and information about products offered by the company. Insecticides India Ltd, a leading agrochemical company plans to invest USD22.9 million in the next two years to expand its production capacity
Pesticide consumption* (kg/ha)
Agrochemical industry growth outlook (USD billion)
17
CAGR: 11.7%
7.5
12
4.3
5
5
UK
France
7
7
Korea
USA
13
0.6 India FY14
JANUARY 2016
FY19E
Japan
China
Taiwan
Source: FICCI, India Chem, TechSci Research Notes: E - Estimates, CAGR - Compound Annual Growth Rate Note: * - Data is of 2014
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38
CHEMICALS
SUCCESS STORIES JANUARY 2016
CHEMICALS TATA CHEMICALS: DIVERSIFYING THEIR WAY TO SUCCESS … (1/3) Revenue breakup of TATA chemicals (FY15)
Tata Chemicals Limited (TCL) is one of the leading chemical companies in India, with significant operations in India and Africa Second-largest soda ash producer in the world and the largest in India
Soda Ash 2%
A market leader in edible salt; largest STPP player in the country
Complex Fetrilizers
19% 38%
Most energy-efficient urea fertiliser manufacturer in India; amongst the most efficient globally
Urea
1% Vaccum and Iodised Salt
6%
Cement
1/3rd stake holder in IMACID, Morocco, assured supply of key inputs
13% Others 21%
Soda Ash market holds the maximum share of 38% followed by Complex Fertilizers and Urea with 21% and 13% respectively; Soda ash market in India saw a growth of 10 per cent during the period 2014-15
Other Income
Source: Company Annual Report, TechSci Research Notes: STPP * - Sodium Tripolyphosphate IMACID - Indo Maroc Phosphore S.A.
JANUARY 2016
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CHEMICALS TATA CHEMICALS: DIVERSIFYING THEIR WAY TO SUCCESS … (2/3) 2014-15 2013
2012
2011 •
2010 •
2009
•
India's first iodine plus iron fortified salt launched by • Tata Chemicals Tata Chemicals Europe Ltd acquires British • Acquires South Salt, producing Africa’s Grown approximately Energy half of the UK’s pure salt
Acquires controlling stake in Rallis India Limited
Tata Chemicals wins two awards at the • Tata Chemicals was Brand Leadership awarded 'Dun & Award 2013 for Bradstreet Corporate ‘Emerging Brand’ Awards 2015' in the and '50 Most fertilizer’s sector Talented Brand • Tata Chemicals Leaders of India' announced the launch of a new brand “Tata Sampann for providing quality food products
Source: Company website, TechSci Research
JANUARY 2016
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41
CHEMICALS TATA CHEMICALS: DIVERSIFYING THEIR WAY TO SUCCESS … (3/3) Turnover over the years (USD billion)
Geographical diversification (FY15)
CAGR: 9.55% 2.9
2.8
2.8
2.8 2.6
4%
2.4
9% 2
Asia 15%
America
1.5
1.47
Europe Africa 72% FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15 FY16*
Tata Chemicals Limited (TCL) earned net profit of USD86.25 million in FY16* Source: Tata Chemicals Annual Report, TechSci Research Notes:FY16* - Data is for half year ended till September 2015
JANUARY 2016
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42
CHEMICALS UNITED PHOSPHORUS LIMITED (UPL): AN AGROCHEMICAL SUCCESS … (1/2) Total sales (USD million)
UPL is mainly engaged in the business of agrochemicals, other industrial chemicals, and chemical intermediates Agrochemicals account for 96 per cent of the total sales of the company, while the industrial chemicals and intermediates segments together account for 4 per cent
CAGR: 11.92%
UPL has 28 manufacturing sites – 13 in India and 15 outside India(international) The company has also strengthened its distribution reach and access to new markets through strategic alliances with agrochemical manufacturers in other countries The company is planning to launch innovative technology, farming solutions, and new products through its other arms such as Advanta and Golden Seeds UPL has been ranked the fifth largest agrochemical company globally
JANUARY 2016
1600
900
FY08
1000
FY09
1100
FY10
1980.10 1700
1800
1200
960.60
FY11
FY12
FY13
FY14
FY15
FY16*
Source: United Phosphorus Limited (UPL) Annual Reports, TechSci Research Notes: CAGR - Compound Annual Growth Rate, FY16*- Mentioned revenue is for half year ended September 2015
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43
CHEMICALS UNITED PHOSPHORUS LIMITED (UPL): AN AGROCHEMICAL SUCCESS … (2/2) UPL Limited comprises of UPL, Advanta and UEL companies that are listed in the Indian Stock Exchange In 2015, UPL Mumbai won the Dun & Bradstreet Corporate Award in the agrochemicals sector
Income by region - FY16*
EBIDTA (USD billion)
CAGR: 11.7%
0.39 0.36
12%
India
0.31
31%
0.26
Latin America
15%
0.21 North America
0.32
0.22
0.18 0.15
Europe 16% 26%
Rest of World FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15 FY16*
Source: Company Annual report, TechSci Research Notes: EBIDTA - Earnings Before Interest, Taxes, Depreciation and Amortisation * - Data is for half year ended September 2015
JANUARY 2016
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44
CHEMICALS ASIAN PAINTS: A COLORFUL GROWTH PATH In 1942, Asian Paints started manufacturing in a Mumbai garage; now, with total installed capacity of nearly 1 million kilo-litre, Asian Paints is amongst the largest paint manufacturing companies in the world Asian Paints has grown at an excellent pace over the years; a CAGR of 13.27 per cent from FY09–15 and net profit after tax earned for FY16 (during April – September 2015) is at USD144.4 million The company’s seventh and largest decorative paint manufacturing plant with an installed capacity was commissioned in February 2013 In 2015, Asian Paints was awarded as the “Most Impactful Companies of the Decade” by CNBC. The company was listed on India’s Super 50 companies in the July 2015 issue by Forbes India
Asian Paints geography wise sales (FY15)
7.0%
Asia (Bangladesh, Nepal, Sri Lanka, Singapore and Indonesia)
11.8% 48.6%
1600
1100
1200
FY09
FY10
1900
2000
2100
2322.9 1212.4
Caribbean (Barbados, Jamaica, Trinidad & Tobago) South Pacific (Fiji, Solomon Islands, Samoa, Tonga & Vanuatu) Africa (Ethiopia)
JANUARY 2016
CAGR: 13.27%
Middle East (Egypt, Oman, Bahrain & UAE)
1.6%
31.0%
Asian Paints Revenue (USD million)
FY11
FY12
FY13
FY14
FY15
FY16*
Source: Company Annual report, TechSci Research Notes: KL - Kilo Litre, CAGR - Compound Annual Growth Rate * - Data is for half year ended September 2015
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45
CHEMICALS INDIA GLYCOLS LIMITED India Glycols Limited sales (USD million)
Established in 1983, India Glycols is the only company that manufactures green technology-based bulk, specialty and performance chemicals and natural gums, spirits, industrial gases, sugar and nutraceuticals in India
632.1 576.4
The company operates in five segments, Chemicals which forms the largest segment
including 479 418.8
386.9
The company exports to more than 40 countries including the US, Japan, and countries in Europe and Latin America
334.2 224.5
252.9 204.9
During FY08–15, the company’s sales have increased at a CAGR of 3.27 per cent to USD418.8 million FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16*
Source: Company Annual Report, TechSci Research Notes: CAGR - Compound Annual Growth Rate, FY16*- Up to September 2015 TTM – Trailing Twelve Months
JANUARY 2016
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46
CHEMICALS
USEFUL INFORMATION JANUARY 2016
CHEMICALS INDUSTRY ASSOCIATIONS Indian Chemical Council Sir Vithaldas Chambers, 16-Mumbai Samachar Marg, Mumbai – 400023 Phone: 91 22 22047649/ 22846852 Fax: 91 22 22048057 Website: www.icmaindia.com
Alkali Manufacturers Association of India 3rd Floor, Pankaj Chambers, Preet Vihar Commercial Complex, Vikas Marg, New Delhi – 110092 Phone: 91 11 22432003, 22410150, 55253401 Fax: 91 11 22468249 Website: www.ama-india.org
Indian Specialty Chemical Manufacturers' Association 1156, Bole Smruti, Suryavanshi Kshatriya Sabhagriha Marg, Off. Veer Savarkar Marg, Dadar (West) Mumbai – 400 028 Tel: 91 22 2446 5003 Website: www.iscma.in
JANUARY 2016
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48
CHEMICALS GLOSSARY OCB: Overseas Corporate Bodies NRI: Non-Resident Indian FY: Indian Financial Year (April to March) So FY10 implies April 2009 to March 2010 NA: Not Available STPP: Sodium Tripolyphosphate MT: Metric Tonnes USD: US Dollar Wherever applicable, numbers have been rounded off to the nearest whole number
JANUARY 2016
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49
CHEMICALS EXCHANGE RATES Exchange rates (Fiscal Year)
Exchange rates (Calendar Year)
Year
INR equivalent of one USD
Year
INR equivalent of one USD
2004–05
44.81
2005
43.98
2005–06
44.14
2006
45.18
2006–07
45.14
2007
41.34
2007–08
40.27
2008–09
46.14
2008
43.62
2009–10
47.42
2009
48.42
2010–11
45.62
2010
45.72
2011–12
46.88
2011
46.85
2012–13
54.31
2012
53.46
2013–14
60.28
2013
58.44
2014-15
61.06
2014
61.03
2015-16(Expected)
61.06
2015(Expected)
63.72
JANUARY 2016
Source: Reserve bank of India, Average for the year
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50
CHEMICALS DISCLAIMER India Brand Equity Foundation (“IBEF”) engaged TechSci to prepare this presentation and the same has been prepared by TechSci in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of TechSci and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. TechSci and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither TechSci nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
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